Accountancy practice and advisors to the Irish hotel sector Crowe has released its annual Hotel Industry Survey.
As hoteliers struggle to recover from the impact of the pandemic Crowe Partner, Aiden Murphy, warned that many hotels in Ireland will record revenue in 2022 that will be over 30% down on 2019 levels – the last full comparable year of trading prior to the pandemic.
The annual survey serves as a benchmark report for revenue, profit, and operational metrics. Insights indicated that the Dublin market will remain most impacted. Despite a strong events and leisure breaks market and predicted recovery in international visitors, it will likely only achieve 70% occupancy level in 2022, a full 12 percentage points down from 2019 levels of 82% occupancy for the Dublin market.
Room rates also likely to be at least 25% down on 2019 levels leaving Dublin hotels very challenged for 2022. It is predicted that regional hotels, less reliant on overseas visitors, will not be as severely impacted, especially those hotels that are strong leisure destinations for the domestic market.
The domestic staycations market bolstered demand and fuelled strong room rates over Summer 2021, but the expectation is that Irish trips abroad will rebound strongly in 2022 resulting in record lower average room rates for Summer 2022.
Aiden Murphy Manging Partner, Crowe, said: “Even when hotel profits return, there will be cash flow challenges as many hotels will need fund repayment of warehoused taxes when this fall due from 2023 onwards. The expectation is that it will be 2025 before 2019 profit levels can be attained.”
Guest speaker at the event, Dermot Crowley, CEO Designate, Dalata Hotel Group, highlighted that getting flight capacity back to 2019 levels is important for occupancy recovery at Irish hotels. He expected strong demand from inbound visitors from the UK in 2022.
Dermot noted that new supply coming into the Dublin market is predominantly budget or aparthotel stock, a category that has been historically undersupplied in the Irish market. In Ireland, traditionally only 3-5% of the hotel stock is in the budget category, this compares to the UK the overall budget stock which comprises 30-40% of the overall market.
With the re-emergence of the events industry in Ireland, he expects the increase in budget hotel rooms supply to be met with strong demand and will attract its own market as seen elsewhere around the UK and Europe.